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‘Green’ bill rises: what the papers say

23 Nov 2012, 11:30

Carbon Brief Staff

Details of the UK's new energy bill have been published, with an
announcement that £7.6 billion a year will go to fund low carbon
energy, which the government will fund from household energy
bills. Here's our rough roundup of all the media
interpretations of how much this will cost consumers, and where we
think the numbers come from.

BBC environment correspondent Roger Harrabin cites two
estimates for how much the £7.6 billion will add to household
energy bills. He reports a DECC estimate that the measures will add
£95 a year, or seven per cent to an average energy bill by 2020 -
although Harrabin notes "some analysts think it would be more".

That apparently includes the government's decarbonisation
advisor, the Committee on Climate Change, which apparently thinks
it would add about "£110 to the average household energy bill by
2020."

Other media outlets have all come out with rather different
assessments of the likely impacts on bills.

"Mr Davey said the costs that some
newspapers were reporting were "utter rubbish" and that it would
only cost £20 a year per household in 2012, rising to just under
£100 in 2020."

The
Telegraph reports the same DECC £95 estimate for additional
costs to consumers by 2020, but the headline reads: 'Wind farms to
increase energy bills by £178 a year'.

However, the article itself says:

"Bills will go up over the next two
decades by an estimated £178 a year under all the Government's
green and fuel poverty policies, with the contribution to nuclear
and renewables making up £95 by 2020"

Setting aside for a moment the fact that the Telegraph headline
wrongly attributes the cost to wind power only, we contacted the
Telegraph to find out where the £178 figure came from.

According to the Telegraph the figure comes from an estimate of
how much all green measures will add to household bills that DECC
released in 2011, coupled with figures Ed Davey quoted this morning
on the publication of the bill.

The Telegraph also suggests that some of the confusion may have
stemmed from DECC not putting their own estimate of bill rises into
their press release, and notes DECC's argument that their policies
will result in a net reduction in bills:

"Officials have not yet worked out how
much the deal will cost households and businesses... They claimed
that bills would rise by £245 a year without these policies, which
reduce dependence on gas prices."

"Electricity bills could rise by £75 a
year by 2020 to fund a new generation of wind farms and nuclear
reactors, it emerged last night"

"And by 2030 annual bills will go up by an estimated £178 under
all the Government's green and fuel poverty policies."

As far as we can tell, the £75 figure here is based DECC's
estimate that green measures currently account for £20 in the
average household energy bill - the Mail has subtracted this sum
from DECC's £95 estimate, to give a £75 rise.

"Energy
firms will be allowed to triple the amount of money they add to
customers' bills to pay for renewable power, nuclear and other
environmental measures [...]"

"[...]the total amount energy suppliers can add to domestic and
business bills will rise from £2.35bn this year to nearly £10bn at
the end of this decade. Adjusting for inflation that would be worth
£7.6bn in today's prices, an increase of nearly three times."
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"Based on government estimates that green measures make up £20 of
the average domestic gas and
electricity bill of £1,249 a year, the cost of increasing the cash
set aside to pay for renewable investment would rise to about £80,
or £60 adjusted for inflation."

"Based on government estimates that
green measures make up £20 of the average domestic gas and
electricity bill of £1,249 a year, the cost of increasing the cash
set aside to pay for renewable investment would rise to about £80,
or £60 adjusted for inflation."

These seem to be (roughly) the same figures that the Mail is
citing, based on calculating the knock-on effects of a three-fold
increase in spending on consumer bills, as suggested by the DECC
press release. Oddly, though, another Independent article is
headlined "
Energy bills to rise by £170 a year to fund wind farms", which
seems to be following the Telegraph's lead.

"Householders will have to pay up to
£100 more a year for their electricity under Government plans to
treble the levy on consumers to help to pay for nuclear power
stations and windfarms.

"They include an agreement that the clean energy levy on
households, commerce and industry will rise from the current £2.35
billion a year to £7.65 billion by 2020. The cash is set aside for
investment in nuclear or renewable energy schemes.

"The current levy accounts for about 5 per cent of the average
household electricity bill, which is reckoned to be £440. However,
for larger family homes it is far higher and could mean the levy on
electricity bills increasing from about £40 a year to £140."

It gives numbers on the Levy Control Framework (LCF), which
forms the mechanism the government uses to control the total amount
that can added to consumer electricity bills. The release says:

"The LCF budget is currently £2.35
billion for low carbon electricity in 2012/13. Under the
agreement announced today low carbon electricity spending under the
LCF will rise to £7.6bn in real terms in 2020/21. The final
limit will be set in nominal terms on revised ONS and OBR numbers
in the New Year. On current figures this would equate to
£9.8bn in 2020/21."

Updated 1.20pm - EnergyUK had told us that the figure that low
carbon energy funding would add £178 to household bills by 2030
reported in the Telegraph came from an unpublished report they were
finalising. They have subsequently told us that this is not
the case, and the Telegraph have confirmed that the estimate
actually came from its own calculations - based on a 2011 DECC's
estimates of how much all environmental measures will add to
household bills by 2030.